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Oct 4, 2018

ImagePresident
Emmanuel Macron, whose popularity in France has plummeted, tried to
appear more down to earth during a trip to the French Antilles last
week.CreditCreditThomas Samson/Agence France-Presse — Getty Images

PARIS — As President Emmanuel Macron presses ahead with the most business-friendly overhaul
of the French labor market in decades, his popularity with many of his
countrymen has gone into a tailspin. Consumer confidence is falling. A
nascent recovery is cooling off. Unemployment has been stuck above 9
percent for months.
And then there was the encounter with the gardener.
In an exchange
that went viral on social media, Mr. Macron was seen as lecturing an
out-of-work gardener in Paris to look harder for a job. “If I crossed
the street, I’d find you one,” he told the man, prompting a Twitter
storm of insults aimed at Mr. Macron, a former investment banker.
That
is hardly the vision of France, or of his presidency, that Mr. Macron
hoped for when he swept into office 18 months ago with a pledge to
revitalize Europe’s third-biggest economy by pursuing work-force reforms
that had been stalled for more than a decade.
His approval
ratings have slumped, and on Wednesday his interior minister resigned,
the third cabinet member to quit in six weeks. Amid the turmoil, the
government is trying to shore up support by giving cash back to the
working class — with tax breaks next year worth 6 billion euros ($6.9
billion) for middle- and low-income earners — while reassuring investors
that his designs for a “new French prosperity” are on track.

Mr.
Macron remains unbending in his attitude — and his criticism that
French society must adapt to thrive. “I will not change course,” Mr.
Macron told the French newspaper Journal du Dimanche.
“We’re in a moment when many political leaders before me have yielded,”
he added. “But it’s more necessary than ever to move ahead with
reforms.”
His remarks dovetailed with a public relations blitz by
some members of his cabinet in recent days, and underscored the stakes
for Mr. Macron as he unwinds business regulations and changes the
parameters of the welfare state. Mr. Macron has insisted that painful
economic measures must come first, including a revamping of France’s
strict labor code and budget cuts to keep the government’s deficit within European rules, to seed dynamism.
Bruno Le Maire, the finance minister, said abandoning pro-business policies would lead to a “dead end.” The 2019 budget also includes an €18.8 billion reduction in payroll and other business taxes to encourage hiring and investment.

ImageBruno Le Maire, the French finance minister, said abandoning pro-business policies would lead to a “dead end.”CreditStephane Mahe/Reuters

“But
French people are skeptical,” Mr. Le Maire told reporters last week.
“We need to explain that this new model will be successful, and that it
takes time before seeing the full benefits.”

If
convincing French voters is an uphill battle, it is especially
challenging for Mr. Macron, who is viewed internationally as a dynamic
European leader. His policies at home have yet to help most households.
In his first year, he delivered tax breaks to corporations and to France’s wealthiest 10 percent, earning him a reputation for favoring the rich.
Purchasing power fell for the bottom 5 percent of households, while the
majority in the middle, about 70 percent, were largely unaffected, according to the French Economic Observatory, an independent think tank.
Changes to the labor code intended to stoke hiring have trimmed unemployment slowly. Joblessness has fallen to 9.3 percent,
from 10.1 percent when Mr. Macron was elected, but is still more than
double the German unemployment rate. Although a nascent recovery before
he took office helped generate jobs, growth has cooled recently to a 1.7
percent annual pace, as it has in the rest of the eurozone.
Mr.
Macron promised voters that he could whittle unemployment to 7 percent
by the next presidential election in 2022. To meet that target, the
economy would have to grow by at least 1.7 percent in each of the next
four years, which is by no means certain, according to the French
Economic Observatory.
Mr. Macron’s economic policies have encouraged companies like Facebook and Fujitsu to increase investments in France. But his style — the confrontation with the gardener is a case in point — has alienated him
from working-class voters and older citizens, who view him as out of
touch and inclined to favor big business at the expense of workers.
Mr.
Macron’s 2019 budget tries to make some amends. It pivots toward those
left behind in the previous round of tax cuts, targeting €6 billion in
housing and payroll tax cuts at the working class, on top of reductions
in employee health care contributions and unemployment insurance
payments. A separate plan would set aside €8 billion to tackle rising poverty with aid and job-training programs for disadvantaged youths under 25.
The
budget is aimed at “making work pay” by leaving more money in workers’
pockets. But to keep the deficit in check, Mr. Macron is also trimming
benefits for those not working, and cutting over 40,000 jobs in the
public sector.

Increases in pensions and family
benefits would be capped at 0.3 percent a year, well below the 1.8
percent annual average inflation rate. Although 300,000 pensioners who
make less than €1,200 a month will be exempted, many older voters are
angry about those cuts and are taking to the streets in protest. There
are 15 million pensioners in France, and three out of four voted for Mr.
Macron in the second round of balloting.

Image

The
weekly market in Civray, France. Mr. Macron’s government is trying to
shore up support by giving tax breaks to the working class while
reassuring investors that his designs for a “new French prosperity” have
not changed.CreditSara Farid for The New York Times

The
government will also tighten unemployment insurance eligibility and
reshape professional training programs to push the jobless into work
more quickly. Despite high unemployment, nearly 330,000 jobs are unfilled as employers scramble to find programmers, drivers and other skilled workers.
To
spur job creation, a new policy aims to increase the number of
medium-size businesses in France, which have struggled to grow at the
same rate as in neighboring countries. These include cutting corporate
social security taxes, and reducing requirements for companies to have union representatives.
Yet
even the business community has been grousing about Mr. Macron’s
changes. Some companies are upset about the government’s plans to limit
the use of short-term contracts, arguing that the policy ignores the
needs of the modern workplace. Employers relied on short-term contracts
during the financial crisis. The sort of innovative industry that France
now seeks — whether digital or manufacturing-based — needs agile and
fluid workers, business groups contend.
Mr. Macron took pains on a
tour of the French Antilles last weekend to appear more down to earth,
glad-handing the public and standing in the rain for selfies with
smiling crowds. “I’m not perfect. There are things that need to be
corrected,” he told the French newspaper Le Monde.
He also remains
adamant that his approach will benefit younger voters — including the
25-year-old gardener who couldn’t find work. Mr. Macron listened to his
complaint that horticulture jobs were hard to find and gave a rapid-fire
response: Be flexible.

“If you’re willing
and motivated, in hotels, cafes and restaurants, construction, there’s
not a single place I go where they don’t say they’re looking for people.
Not one — it’s true!” Mr. Macron told the man.
As it turns out, the man found work as a bus driver, which Mr. Macron’s supporters said showed that jobs were available.
The
French president is “taking a gamble,” said Éric Heyer, the director of
analysis and forecasting at the French Economic Observatory. “By easing
taxes on the middle class, he’s trying to get away from this image that
he’s ‘president of the rich.’”
“The measures will either deepen
inequality or help growth,” Mr. Heyer added. “But nothing is guaranteed
to be a success, so it is unclear if he will win or lose the bet.”

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